Does having a high credit limit with little to no income hurt your credit score?
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I know that it’s best to keep my credit to credit-limit ration below 35% if I want a good credit score.
My boyfriend is very good with his credit. Although he has enough money to max out his credit limit and pay it off every month, he never maxes out his credit card.As I see it, if he opens up another credit card and cut it up so he’s not tempted to use it – he’ll have a higher credit limit and a lower credit utilization ration, which should improve his credit score.
He says that with a small income (he’s still in college) it’s actually hurts your credit score to have high credit limit.
Who is right and what is better for his credit score?
FICO has nothing to do with income
FICO score (and I’m sure it’s the same with all the rest of them) has nothing to do with income.
It’s not factored in, by law. So’s your age, race, origin, and much more. The federal law that regulates the credit information prohibit it.
The only information that goes into your FICO score is information that’s on your credit report. There’s no income there…
As to opening another card and not using it – that won’t help to build credit history because it will be reported as inactive, so…
If your boyfriend is good with credit he can open the new CC and make only small purchases on it. That may actually help.
Just make sure NEVER to be late on payments.
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